Hong Kong's secondary home market remained quiet last week and sales are likely to slow further until the implementation of a new law on sales practices that will take effect on Monday.
There were 97 transactions in the 50 largest private housing estates monitored by Ricacorp Properties for the week ended April 21, one up on the 96 deals of the previous week. The numbers are significantly lower than the average of 207 sales in the past 52 weeks, and about 255 sales per week last year.
A new law to shield buyers from dishonest practices when buying new flats takes effect on Monday and Ricacorp director David Chan said market players had adopted a wait-and-see approach. Some buyers appeared to have postponed purchases until the new law came into force.
With more flat owners lowering prices, buyers were expecting steeper cuts, of at least 10 per cent, Chan said. But most sellers refused to cut deeper than 10 per cent, which had slowed sales.
Chan expected secondary flat sales to remain low this week due to the gap in price expectations between buyers and sellers and buyers' preference to wait for the introduction of the new law.
The head of Hong Kong and China property research at UBS, Eva Lee, said the law could also see some developers put the release of new projects on hold as they adjusted to the new rules.
"We may now see a period during which no new projects will be launched in the coming two to three weeks," she said, adding that the new law may also delay the government's pre-sale approval process. "There may be no sales in the primary market over the coming weekend, and sales volumes may recover gradually in early or mid-May."
According to data from BNP Paribas Securities, there were 62 sales in the primary market over the weekend of April 20-21, up from 41 the previous weekend.
The bank said in a report by analysts Patrick Wong Chi-leung and Lee Wee Liat that some developers hastened sales to avoid extra costs, preparing brochures and other measures to comply with the new rules. For instance, Kerry Properties sold 21 flats at Lions Rise in Wong Tai Sin after offering a 6 per cent discount to buyers settling full payment in 90 days without a second mortgage.
"Since more developers offered new incentives to boost sales … we expect some potential buyers to be attracted by primary projects. This will support primary volumes, but volume in the secondary market may remain at a relatively low level," it said.